On the evening of June 1, Goldman Sachs downgraded Nokia's rating from "buy" to "neutral" in Wednesday on the grounds that Nokia's two quarterly earnings warning would stifle hopes of recovery and threaten its cash reserves. Nokia warned in Tuesday that its two-quarter revenue could fall below its target due to sales and price declines. Goldman Sachs believes the warning raises significant downside risks for Nokia, including a rapid loss of market share and a threat to its distribution advantage, making it difficult to recapture market share through Microsoft's Windows system handsets and worsen the balance sheet. Goldman Sachs said that if sales fell another 30%, Nokia's € 6 billion cash reserves would be depleted. Goldman slashed Nokia's target share price from € 8.8 to € 5.2, and 10-16% 2011-2013 sales forecasts for handheld devices. Nokia shares plunged 14.4% in the US stock market in Tuesday, plunging 8% in European equities. (sincerity)
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